The Digital Single Market faces its greatest challenge

06 December 2016

Author: Graham Taylor

The DSM, at its heart, has a simple objective: to make Europe more competitive in a global market by breaking down unnecessary national barriers across the 28 Member States so that digital innovation can flourish, citizen engagement increase, and industry and trade be more effective within the EU.

A key business approach in today’s digital market is the concept of Open Innovation, whereby competitors collaborate within a common ecosystem to maximise new innovation and business value – rather than try to protect their own innovation within closed walls. That concept is particularly true in Europe.

So the DSM has been seen by everyone (apparently, not quite everyone) as a high value European initiative, with probably European SMEs and citizens the greatest beneficiaries.

Core to the future of the DSM will be the way it handles data, which is now recognised as the single most important currency for DSM to operate. Interoperability, Portability, Security have long been major focus areas. Today we look at Big Data, the ability to operate in Cloud environments, and most recently Free Flow of Data as fundamental issues to grapple with. Free Flow of (non personal) Data is very complex, particularly when considered in the increasingly important domains of Internet of Things, Robotics etc.; it spans everything from ‘data ownership’, liability, processing and of course localisation. Data localisation should be the simplest for Europe to get to grips with. But reading Friday’s ‘non-paper’ from the Council, clearly national politics is at play. Only 14 countries signed the paper calling on the Commission effectively to ban data localisation at national level. What happened with the other 14? Well, we hear some decided the language was actually too weak, but at least France and (it is reported) Spain and maybe Germany were questioning the need for such legislation, wanting to protect national capabilities.

The facts seem to prove them wrong. In its much-quoted recent paper1, the European Centre for International Political Economy (ECIPE) identifies some 22 examples of EU Member States imposing restrictions via data localisation measures on the transfer of data to another Member State, as well as a further 35 restrictions on data usage that could indirectly localise data within a certain Member State. ECIPE also quotes a potential EU GDP gain of up to €8 billion per year (up to 0.06% of GDP) resulting from the removal of such existing data localising measures. Industry for once seems unanimous about the need. In a rare blogpost, the Chairman of IBM in Europe last week launched a strong plea and evidence about the need, but big business would only be one of the beneficiaries – it will be the broad range of SME interests that would really benefit. Is that need not at the core of European objectives?

Last week, OFE was able to articulate its own evidence, when we ran a Round Table on the impact of the European Open Science Cloud (EOSC). Whilst there were lessons to be learnt by joining up the array of wider Cloud-based initiatives and removing overlaps, it was clear that for the prime audience the EOSC was a superb initiative, presenting the same opportunity to maximise the impact of research that Open Data has had in use of public data. Not only was data localisation an unnecessary and possibly unresolvable barrier to success, but its removal is a fundamental pre-requisite building block for what unquestionably would be a huge European investment.

So the message to all policy makers is remarkably simple: instead of looking for ways to water the wording down, the focus should be on tightening it up further, and emphasising that whilst ‘comply or explain’ is perfectly reasonable, there can be no slowing down of the implementation.

1. “Unleashing Internal Data Flows in the EU: An Economic Assessment of Data Localisation Measures in the EU Member States”; see: